Chinascope – Page 804

Qiushi: Who Has the Highest Level of Control over China’s Economy?

[Editor’s Note: Qiushi Theory Online published an article analyzing the “highest level of power” exercised over China’s economy. The article claimed that the U.S. has long controlled China’s economy because it has controlled the “top-level power.” That includes the right to set the exchange rate, to issue base money, and to set the price of assets. The article concluded that the U.S. has plundered China, divesting it of enormous financial profits. The U.S. is the culprit responsible for China’s economic problems including inflation, the real estate bubble, the bear stock market, and company bankruptcies.

The article heavily criticized China’s central bank for selling China’s interests to the U.S.

Yu Yunhui, who holds a Ph.D. in economics from Xiamen University, is the author. He is not well-known. However, the article appeared in Qiushi, a prominent periodical on political theory that the Chinese Communist Party’s (CCP’s) Central Party School and the Central Committee publish. That, in itself, makes it worthy of attention and consideration.

The following is a translation of a majority of the article. The Chinascope editors do not analyze the author’s arguments, but leave it to the reader to do so.] [1]

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Reports | | December 7, 2013 | Report

Trading of Chinese Renminbi Is Increasing Rapidly in Russia

Russian Finam recently released data indicating that, as of November, the trading volume of the RMB at the Moscow Interbank Currency Exchange (MICEX) had increased 19 times since April. At the same time, statistics from many Russian banks with RMB-related businesses showed that the Russian public’s recognition and acceptance of the RMB has also risen. Analysts believe that the weakening of the euro and the dollar, the steady growth of Sino-Russian trade, and other factors have been accelerating the process of the internationalization of the RMB.

Back in December 2010, MICEX started direct trading of the RMB against the ruble and became the first overseas brokerage offering an RMB exchange. In April of this year, the brokerage increased the trading options of the RMB against the ruble, extended trading hours, and added more delivery methods. Trenin, director of the Moscow Carnegie Center, told reporters that, by adjusting the trading rules, the RMB obtained the same trading conditions as the dollar and the euro. Trenin affirmed that, as the liquidity of the dollar and euro is tightening, the average daily trading volume of the RMB has been increasing significantly. Since May of this year, the average daily trading volume of RMB has exceeded 22 million yuan.

People’s Daily, December 3, 2013

http://world.people.com.cn/n/2013/1203/c1002-23721945.html

Briefings | | December 6, 2013 | Economy/Resources

Non-Performing Loans Continue to Grow

According to the China Banking Regulatory Commission, the total value of non-performing loans has increased for seven consecutive quarters.

As of the end of the third quarter of this year, commercial banks saw their non-performing loans reach 565.6 billion yuan (US$92.85 billion), an increase of 70.7 billion yuan (US$11.61 billion) since the beginning of the year. This accounts for 0.97 percent of total loans, an increase of 0.01 percentage point compared to the end of the second quarter; the figures show that there has been an upward trend for seven consecutive quarters.

The total of non-performing loans for 16 banks that are listed on stock exchanges amounted to 460 billion yuan (US$75.52 billion) in the third quarter, an increase of 18 billion (US$2.96 billion) from the second quarter. Of these 16 banks, 14 have seen both their non-performing loan ratio and the value of the loans increase. Meanwhile, the profit growth of the 16 banks has dropped from 17 percent for the same period last year to 13 percent.

Source: Huanqiu, December 3, 2013

http://finance.huanqiu.com/data/2013-12/4623461.html

Briefings | | December 6, 2013 | Economy/Resources

IMG Artists & China Arts and Entertainment Group Announce Sino-U.S. Joint Venture

On November 22, The China Arts and Entertainment Group (CAEG) and IMG Artists announced a new joint venture – Sino America Global Entertainment (SAGE) – effectively the largest private, performing arts partnership between the United States and China. Liu Yandong, Vice Premier of the State Council, and Ding Wei, Vice Minister of the Ministry of Culture oversaw the official signing during a Symposium held at Carnegie Hall in New York. Dignitaries and executives from the leading arts, education, and culture institutions in New York were in attendance.

IMG Artists LLC is a leading universal performing arts management corporation with diverse lines of business. IMG Artists’ capabilities include the management and touring of world renowned musicians, dance companies, orchestras, and attractions, as well as consulting and advisory work for independent clients, arts institutions, concert halls, and culturally engaged corporations.

According to CAEG’s website, "China Arts & Entertainment Group (CAEG) is a large State-owned cultural company, and one of the four national model bases for cultural exports affirmed by the Ministry of Culture. CAEG so far has organized 290 programs and 21,000 performances in some 60 countries and regions, attracting more than 28 million audience members. The group has 19 wholly-owned companies at home and abroad."

According to Zhang Yu, president and general manager of CAEG, the mission of CAEG is to have Chinese culture "go global." With SAGE, Chinese cultural programs can reach mainstream audience in North America via operations such as North American business tour, "Chinese Culture Week," and "Chinese Cultural Festival." But there is a greater significance. "For a long time, the landing of our cultural and arts products overseas has depended almost entirely on foreign performing companies. Although this avoided risk, we lost the autonomy of our cultural products. As we could not reach the end consumers, we were not able, on a fundamental level, to enter the market and effectively compete. The launch of the joint venture allows us to be effective in localizing the operations in New York, the center of world’s performing arts, and other parts of the North America market, so as to transition from the model of relying on local performing companies to directly facing the end consumers."

SAGE will build new platforms for global entertainment and performing arts initiatives including international arts festivals, talent exchange, sharing of local market expertise and more.

Source: Xinhua, December 3, 2013
http://news.xinhuanet.com/2013-12/03/c_118393477.htm

Briefings | | December 5, 2013 | Geo-Strategic Trend

People Daily: China’s ADIZ Hit Japan and the U.S. Where It Hurts

The following is an excerpt from a commentary published on the People’s Daily website:

China’s announcement of an air defense identification zone (ADIZ) caused uproars in Japan, the United States, Australia, Canada and other Western countries. Japan and the U.S. even sent military planes as an act of provocation. Their media also followed the barking and rallied together to attack (China). Some people laughed at China, saying that the ADIZ is a self-inflicting "disgrace," "useless," "a paper tiger." In fact, such an extraordinary response proves that the Chinese move hits Japan and the U.S. exactly where it hurts.

One of the accusations against China is China’s military modernization is "breaking the balance of power in the region." The United States, therefore, should "return to Asia" to rebuild "the Asia-Pacific balance." Some U.S. allies in Southeast Asia also expect the United States to balance China. It should be noted that the Asia-Pacific has never had military balance: the United States not only has never left Asia; it has had military dominance in East Asia. … In recent years China’s military modernization has been more for the sake of configuring its legitimate defense, as is needed for a big country. It is a process to rectify the "imbalance" and achieve "rebalance." This is where the United States and Japan’s worries are. However, China cannot stop growing the crops because of "fear of locusts.”

Establishing the ADIZ is not only a matter of the sovereignty of our core national interests and of economic importance; it also has great strategic significance. The United States not only has never accused Japan because of its air identification zone; the U.S. also strongly supported it. Why do the two countries cooperate so seamlessly? Their purpose is, through the establishment of an air defense identification zone, to achieve blockage of China’s sea and air passages at the first island chain. In fact, Japan’s attempt is not "unacceptable." China must break barriers. How to break through? The United States and Japan have now shown us the way to follow. Now that American and Japanese military airplanes can break into China’s ADIZ without notice, then China of course can pass through Japan’s aviation identification zone without notification. Thus, the first island chain of the U.S. and Japan has become a "useless paper tiger."

Source: People’s Daily, December 3, 2013

http://world.people.com.cn/n/2013/1203/c1002-23729935.html

Briefings | | December 5, 2013 | US-China Relations

Xia Bin: Urbanization Depends on Further Reforms

Xia Bin, Director-General, Financial Research Institute, Development Research Center of the State Council (DRC), People’s Republic of China, wrote that the two key issues affecting urbanization in China are welfare benefits to farmers and urban planning.

Xia stated that the Chinese leadership has adopted the strategy that China must accelerate urbanization in order to stabilize the economy. At the minimum, according to Xia, China must carry out reform in these areas:

1. To accomplish the objective of increasing the welfare benefits to farmers, reform is needed in the household registration system, housing, the medical system, retirement, education, the financial system, and land use;

2. To accomplish the objective of ensuring the source and efficacy of the funds for urban infrastructure construction, reform is needed in the financial system, land administration, the allocation of resources, the division of power between the central government and local governments, the price mechanism involved in the factors of production, and the overall government administrative system;

3. In order to optimize urban planning, including the creation of new municipalities, a series of policies must be revised.

“In short, we can say China has almost no existing system and policy it can follow without addressing the need for improvement in the areas of reform that must be carried out in order to achieve its urbanization strategy. Therefore, the current strategy to promote urbanization is to promote further reforms. The essence of the urbanization strategy is to accelerate China’s reforms.”

Source: China Economic Times, December 2, 2013

http://www.cet.com.cn/ycpd/sdyd/1045775.shtml

Briefings | | December 5, 2013 | Economy/Resources

Due to Local Debts, Shadow Banking, and Property Bubbles, China’s Economy May Crash at Any Time

On December 3, 2013, the Hexun website, a leading financial and securities information website in China, published an article on three major financial risks that China faces. The three major financial risks in China are local government’s debts, shadow banking, and property bubbles. Once one of these 3 financial risks gets out of control, China’s economy may crash at any time.

China’s local government’s debts have been growing continuously in recent years. Currently, local debts have reached around 20 trillion Chinese yuan, which is 40 percent of its total GDP for 2012. Shadow banking in China poses the 2nd biggest risk for its financial system. As China has never publicized any real estate statistical data, there has been a debate as to whether China has a property bubble. However, according to scholars’ research there are 68 million vacant housing units in China. If that is true, then China’s property bubble is very large. Once the bubble breaks, a destructive domino chain reaction may not only crash China’s economy but also lead to wide scale social unrest in China.

Source: Hexun, December 3, 2013
http://opinion.hexun.com/2013-12-03/160234304.html

Briefings | | December 4, 2013 | Economy/Resources

Wu Guoguang: Xi Jinping’s Reversal of the Course, Will China’s Transition be Peaceful or Marked with Bloodshed?

Cheng Xiaonong: U.S.-China Strategic Relations Have Crystallized

Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”

The CCP’s Performing Arts Troupes in the U.S.